Question 1

The use of electronic banking does not add to the "float" time for financial services customers.

Accepted Answer

A) True 
 B)False

Question 2

When interest rates are falling, a person would be best served by

Accepted Answer

A)   short term loans
B)   short-term savings instruments.
C)   same approach as if interest rates are rising.
D)   variable-rate loans.
E)   long term loans.F) B) and E)
G) B) and C)

Question 3

The rate of return on a savings account is also referred to as

Accepted Answer

A)   liquidity.
B)   compounding.
C)   asset management.
D)   insolvency.
E)   yield.F) None of the above
G) C) and E)

Question 4

If the annual rate is 8%, and the interest is compounded quarterly, what is the effective annual rate?

Accepted Answer

A)   8.00%
B)   10.25%
C)   10.38%
D)   7.85%
E)   8.24%F) A) and B)
G) D) and E)

Question 5

Joan Zemke expects interest rates to decline over the next few months. To maximize her earnings she should use a(n)

Accepted Answer

A)   five-year GIC.
B)   interest-bearing chequing account.
C)   regular savings account.
D)   six-month GIC.
E)   money market fundF) B) and D)
G) A) and C)

Question 6

Time deposits are more commonly referred to deposits made to savings accounts and investment certificates.

Accepted Answer

A) True 
 B)False

Question 7

Evan Kostakis is living in this country while going to school. He is not familiar with the operation of savings plans available to consumers. What factors would you recommend that he consider when evaluating and comparing different savings plans?

Accepted Answer

When evaluating a savings plan...

Question 8

If the annual rate is 3% and inflation is 2%, then the approximate real rate of return is:

Accepted Answer

A)   5.00%
B)   3.00%
C)   1.00%
D)   - 1.0%
E)   0%F) D) and E)
G) A) and C)

Question 9

The major service offered by investment companies is

Accepted Answer

A)   interest-bearing checking accounts.
B)   variable-rate loans.
C)   credit card accounts.
D)   savings bonds.
E)   mutual funds.F) C) and D)
G) None of the above

Question 10

If the annual rate is 10% and inflation is 4%, then the approximate real rate of return is:

Accepted Answer

A)   14.00%
B)   4.00%
C)   6.00%
D)   6.80%
E)   7.00%F) B) and D)
G) A) and E)

Question 11

The more frequent the compounding, the less a person will earn on a savings account.

Accepted Answer

A) True 
 B)False

Question 12

A trust is a safe place for people to make large deposits for maximum security

Accepted Answer

A) True 
 B)False

Question 13

In the bank reconciliation process, service fees should be

Accepted Answer

A)   added to the bank statement balance.
B)   subtracted from the bank statement balance.
C)   added to the chequebook balance.
D)   subtracted from the chequebook balance.
E)   added to direct deposits.F) A) and E)
G) A) and D)

Question 14

A saver will usually earn the highest rate with which of the following types of savings plans?

Accepted Answer

A)   Guaranteed Investment Certificates
B)   club account
C)   passbook account
D)   share account
E)   NOW accountF) None of the above
G) A) and B)

Question 15

A personal cheque with guaranteed payment is called a

Accepted Answer

A)   traveler's cheque.
B)   bank draft.
C)   certified cheque.
D)   money order.
E)   cashier's cheque.F) B) and C)
G) A) and C)

Question 16

Robert expects interest rates to rise over the next few months. To maximize his earnings he should use a:

Accepted Answer

A)   regular savings account.
B)   five year GIC.
C)   five-year certificate of deposit.
D)   six-month certificate of deposit.
E)   money market fundF) D) and E)
G) B) and E)

Question 17

If the annual rate is 8%, and the interest is compounded monthly, what is the effective annual rate?

Accepted Answer

A)   8.00%
B)   10.25%
C)   10.38%
D)   7.85%
E)   8.30%F) A) and D)
G) C) and D)

Question 18

A "free" chequing account with a minimum balance of $500 has no opportunity cost.

Accepted Answer

A) True 
 B)False

Exam 4: The Banking Services of Financial Institutions

Evan Kostakis is living in this country while going to school. He is not familiar with the operation of savings plans available to consumers. What factors would you recommend that he consider when evaluating and comparing different savings plans?

Correct Answer
verified
When evaluating a savings plan...
View Answer

Robert expects interest rates to rise over the next few months. To maximize his earnings he should use a:

Correct Answer
verified

In the bank reconciliation process, service fees should be

Correct Answer
verified

Time deposits are more commonly referred to deposits made to savings accounts and investment certificates.

Correct Answer
verified

A "free" chequing account with a minimum balance of $500 has no opportunity cost.

Correct Answer
verified

The use of electronic banking does not add to the "float" time for financial services customers.

Correct Answer
verified

If the annual rate is 3% and inflation is 2%, then the approximate real rate of return is:

Correct Answer
verified

The major service offered by investment companies is

Correct Answer
verified

A saver will usually earn the highest rate with which of the following types of savings plans?

Correct Answer
verified

When interest rates are falling, a person would be best served by

Correct Answer
verified

If the annual rate is 10% and inflation is 4%, then the approximate real rate of return is:

Correct Answer
verified

The rate of return on a savings account is also referred to as

Correct Answer
verified

Joan Zemke expects interest rates to decline over the next few months. To maximize her earnings she should use a(n)

Correct Answer
verified

A trust is a safe place for people to make large deposits for maximum security

Correct Answer
verified

A personal cheque with guaranteed payment is called a

Correct Answer
verified

The more frequent the compounding, the less a person will earn on a savings account.

Correct Answer
verified

If the annual rate is 8%, and the interest is compounded monthly, what is the effective annual rate?

Correct Answer
verified

If the annual rate is 8%, and the interest is compounded quarterly, what is the effective annual rate?

Correct Answer
verified

Exam 4: The Banking Services of Financial Institutions

Evan Kostakis is living in this country while going to school. He is not familiar with the operation of savings plans available to consumers. What factors would you recommend that he consider when evaluating and comparing different savings plans?

Correct AnswerverifiedWhen evaluating a savings plan...View AnswerShow Answer

Robert expects interest rates to rise over the next few months. To maximize his earnings he should use a:

Correct AnswerverifiedShow Answer

In the bank reconciliation process, service fees should be

Correct AnswerverifiedShow Answer

Time deposits are more commonly referred to deposits made to savings accounts and investment certificates.

Correct AnswerverifiedShow Answer

A "free" chequing account with a minimum balance of $500 has no opportunity cost.

Correct AnswerverifiedShow Answer

The use of electronic banking does not add to the "float" time for financial services customers.

Correct AnswerverifiedShow Answer

If the annual rate is 3% and inflation is 2%, then the approximate real rate of return is:

Correct AnswerverifiedShow Answer

The major service offered by investment companies is

Correct AnswerverifiedShow Answer

A saver will usually earn the highest rate with which of the following types of savings plans?

Correct AnswerverifiedShow Answer

When interest rates are falling, a person would be best served by

Correct AnswerverifiedShow Answer

If the annual rate is 10% and inflation is 4%, then the approximate real rate of return is:

Correct AnswerverifiedShow Answer

The rate of return on a savings account is also referred to as

Correct AnswerverifiedShow Answer

Joan Zemke expects interest rates to decline over the next few months. To maximize her earnings she should use a(n)

Correct AnswerverifiedShow Answer

A trust is a safe place for people to make large deposits for maximum security

Correct AnswerverifiedShow Answer

A personal cheque with guaranteed payment is called a

Correct AnswerverifiedShow Answer

The more frequent the compounding, the less a person will earn on a savings account.

Correct AnswerverifiedShow Answer

If the annual rate is 8%, and the interest is compounded monthly, what is the effective annual rate?

Correct AnswerverifiedShow Answer

If the annual rate is 8%, and the interest is compounded quarterly, what is the effective annual rate?

Correct AnswerverifiedShow Answer

Correct Answer
verified
When evaluating a savings plan...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
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